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OfficeMax and Office Depot announced Wednesday that the two rivals will merge in an all-stock agreement.

The marriage is one of necessity: It puts the office supply retailers in a better position to compete with big-box stores such as Walmart, Costco and Target and online giant Amazon, the companies said.

"In the past decade, with the growth of the Internet, our industry has changed dramatically," said Neil Austrian, chairman and chief executive officer of Office Depot.

The merger will make the combined company one of the nation's largest brick-and-mortar and online sellers of office supplies, with annual revenue of about $18 billion. Staples remains the office market leader, with $25 billion in annual sales.

In Orange County, OfficeMax has five branches, while Office Depot has 13 stores.

At the end of 2012, OfficeMax had more than 900 stores in the U.S. and Mexico; Office Depot operated 1,112 stores in the U.S. and Puerto Rico.

Shoppers should expect some consolidation to take place, said Lucile Faurel, assistant professor at UC Irvine's Paul Merage School of Business, who follows mergers and acquisitions.

"In a merger, the number of stores in the portfolio increases," Faurel said. "In tight economic conditions, the firms make decisions as to where to save costs. The lesser-performing stores are going to go."

Closures also are likely when there's "redundancy in offerings" – when two or more stores are located too close to each other, she said. Both OfficeMax and Office Depot closed several stores last year.

The name of the combined company has yet to be announced, but the search for a CEO has begun. Both Austrian of Office Depot and Ravi Saligram, CEO of OfficeMax, are being considered for the position.

The new company name could be a combination of the existing monikers, but the more likely scenario is that one of the two names will prevail, Faurel said.

In mergers, companies give the impression that parity exists between the two firms, Faurel said. Behind the scenes, it's rarely a merger of true equals, she said. "There is an acquiring firm and there is a target firm."

Under the terms of the proposal, OfficeMax stockholders will receive 2.69 Office Depot common shares for each share of OfficeMax common stock.

The retailers will continue to operate separately until the transaction closes at the end of the year.

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